Will employers face an increased bill for part-year workers’ backdated holiday pay?

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Full-time workers and employees receive a minimum of 28 days holiday per annum (inclusive of the 8 public holidays), and payment in respect of any leave which the worker is unable to take is generally an easy calculation to make. The calculation of part-year workers’ (those employed all year round but not working the whole year) holiday entitlement has historically proven problematic for employers due to the unpredictable nature of those hours. It was solved by applying the same calculation of 12.07% for staff working a whole year (based on 5.6/46.4 weeks) to part-year workers based upon the number of hours worked per year, and until last week, this was the approach taken by most employers.

The pro-rat’ed calculation has been disapproved of in the recent case of The Harpur Trust v Brazel [2019] EWCA Civ 1402). In that case, the Court of Appeal accepted that the EU Working Time Directive (2003/88/EC) (WTD) requires that workers accrue entitlement to paid annual leave in proportion to the time that they work, but found that leave entitlement is distinct from the remuneration payable in respect of such leave. The Court of Appeal has held that calculation of the payment of part-year workers’ annual leave entitlement should not be capped at 12.07% of annualised hours. It found that although the approach of 5.6/46.4 is valid, the reference period for which the calculation is applied should be a 12-week average of hours worked, which may result in a higher percentage to the worker. In this case, it resulted in holiday pay of around 17.5% of annual pay.

There is anecdotal evidence that a number of employers have neglected to pay their part-year workers (such as exam officers and invigilators) for their legitimately accrued holiday entitlement, which they are required to do regardless of the recent case law. Should those workers bring a claim against the education authority or school, the bill that was previously capped at 12.07% may well have increased.

Meaby & Co are lawyers experienced in all aspects of employment issues. Should you require advice on any aspect of employment law, including the above, please contact Chris Marshall on 0207 703 5034.